Building on Land You Don’t Own in NSW

21st July, 2025

 

With property prices rising and housing harder to access, many Australians are turning to creative solutions. One popular option is building a home -often a tiny one- on family or friends’ land. While this can be a smart and cost-effective move, it’s important to protect yourself legally and financially. In New South Wales (NSW), there are key steps you should take before laying a single brick.

 

Can You Build on Land You Don’t Own?

Yes, it is possible to build on land you don’t own, particularly if it’s owned by a family member. While a handshake agreement might feel sufficient at first, it can lead to complications down the track. Therefore, formalising the arrangement is always recommended.

Understand the Legal Framework

Before building, you’ll need to check the zoning and land use rules in the local government area. Every council has different regulations. Some may allow a second dwelling or granny flat, while others may restrict development. Because councils may change these rules, checking the updates regularly is important.

Additionally, permanent structures—unlike caravans or tiny homes on wheels—usually need a Development Application (DA). This can take time and may not always be approved. On the other hand, tiny homes on wheels may be treated like caravans, which usually require fewer approvals.

Consider a Lease or Licence Agreement

To protect your rights, it’s a good idea to have a formal lease or licence agreement with the landowner. In NSW, a lease is more common for houses because it grants you exclusive possession of the property for a fixed period. This means you have greater security and control, like a typical rental agreement.

On the other hand, a licence allows you to use the land but does not give exclusive possession. Licences are usually for short-term or limited purposes and provide less security than leases.

Although these agreements might seem straightforward, it’s important they are carefully written. For example, longer-term agreements may require local council approval to be valid. Without proper permissions, the agreement might not be legally enforceable. That’s why expert advice is essential before finalising anything.

Protect Against Future Disputes

Even if you’re building on your parents’ property, disputes can still happen. Families change, relationships evolve, and intentions shift. Therefore, documenting the arrangement clearly can prevent serious issues in the future.

If the property is sold or inherited, what happens to your home? Who pays for upkeep, insurance, or repairs? Addressing these questions early reduces future uncertainty. While verbal agreements are easy, written ones are much safer.

A Real Legal Example

Sometimes disputes aren’t about the main house itself but related structures or works on the land. For example, in the local case of Byron Shire Council v Vaughan, the conflict involved coastal protection works built to prevent erosion that extended onto neighbouring properties. Although not about a house encroachment, the case shows how unclear permissions and boundaries around parts of a property can cause

costly and complex legal battles. This highlights the importance of clear agreements and professional advice before undertaking any construction or land works -even for parts like retaining walls, fences, or protective structures.

Examples to Consider

· You’ve built a tiny home on your aunt’s rural land. A lease helps you stay secure, even if she sells.

· Your parents allow you to build a granny flat. A DA is approved, but you formalise the arrangement with a licence agreement for further protection.

· You install a movable home but want to live there long-term. Confirm with council if this is allowed.

 

Building on a loved one’s land can be a great solution. However, legal clarity is vital to ensure you’re protected long-term. From council approvals to lease drafting, there’s more to this than meets the eye.

If you’re considering building on someone else’s land, get in touch with a conveyancing expert to make sure you’re protected.

 

At Bangalow Conveyancing, we specialise in complex property matters. We can review contracts, help with lease or licence agreements, and advise on council requirements. Whether you’re planning a granny flat or placing a tiny home on wheels, we’re here to help you avoid costly mistakes and secure your future. Contact us today for clear, friendly legal advice.

If you found the information in this blog post helpful, check out our other regularly updated blog posts.